The ministry said 3.4 million people were registered as out of work last year, some 290,000 fewer than in 2016.
But one of Spain's most influential unions, UGT, retorted that the labour market was still suffering the effects of the crisis and austerity measures implemented by Prime Minister Mariano Rajoy's government.
"Jobs are increasingly temporary and in December just four out of every 100 contracts signed were long-term and full-time," it said in a statement.
According to the labour ministry, some 19.6 million temporary contracts were signed last year, up 7.1 percent from 2016, while just 1.9 million long-term contracts were handed out, a 12.6 percent rise.
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Photo: Samuel Aranda/ AFP
Rajoy's conservative government has come under fire for the unstable and temporary nature of many new contracts, even as the jobless rate has come down sharply from the 26 percent reached in 2013 at the height of the crisis.
In the third quarter of 2017, it had dropped to 16.4 percent, but was still the second-highest level in the European Union after Greece.
"We are recovering more than 70 percent of jobs lost during the biggest crisis Spain experienced in decades," Rajoy said in televised comments.
He added however that economic uncertainty persisted over the secession crisis in Catalonia.
The official jobless rate -- which measures the number of people out of work as a proportion of the working population -- will be published later this month by Spain's statistics agency.